Retail Indian Investors Back to Share Market via Mutual Funds

July 14, 2015

The Retail Indian Investors is back into the Share Market after a gap of 6 years after their tryst with Real estate & Gold appeared to have given lesser returns than the Equities.

Increased participation of retail investors through Mutual Funds [MF] rather than direct equity purchases is an encouraging development as it is the Fund Managers job to manage your Hard Earned money at a cost of say around 2% which is worth it. Didn’t we tell you to Invest through Dedicated Mutual Funds 10 Years ago ? Net inflows into domestic equity MFs amounting to Rs329bn (US$5.2bn), up 3.5x YoY [3.5 Times i.e 350%] and up 60% QoQ, have been exceptionally strong in the Apr- Jun-15 quarter. This was on top of net inflow of Rs710bn in FY15, by far the highest ever annual inflow and 76% of the cumulative inflow in the previous 13 years.

Domestic Investors [MF & Insurance Companies] Vs Foreign Investors Interest in Indian Equity
Cumulative equity holding of domestic MFs, currently valued at $58bn, is a fraction of the current cumulative holding of FIIs, which is currently valued at $306bn. Including insurance companies, total holding of DIIs is currently valued at $137bn. DIIs currently own 11.7% stake in BSE100, nearly half of the 23.1% stake held by FIIs.

Indian mutual fund (MF) industry remains vastly underpenetrated with AUM of only Rs12tn (US$190bn) versus bank deposits of Rs88tn ($1,386bn). Take a SIP by SIP approach to stay Invested in Mutual Funds.